The International Monetary Fund IMF has approved the US$3.4
billion requested by the Federal government to help address the severe economic
impact of the COVID-19 pandemic and the sharp fall in oil prices.
The Executive Board of the International Monetary Fund (IMF)
approved the financial request today April 28.
The IMF in a statement released, said the financial support
will ''help limit the decline in international reserves and provide financing
to the budget for targeted and temporary spending increases aimed at containing
and mitigating the economic impact of the pandemic and of the sharp fall in
international oil prices.''
“The COVID-19 outbreak—magnified by the sharp fall in
international oil prices and reduced global demand for oil products—is severely
impacting economic activity in Nigeria. These shocks have created large
external and financing needs for 2020. Additional declines in oil prices and
more protracted containment measures would seriously affect the real and
financial sectors and strain the country’s financing.
“The authorities’ immediate actions to respond to the crisis
are welcome. The short-term focus on fiscal accommodation would allow for
higher health spending and help alleviate the impact of the crisis on
households and businesses. Steps taken toward a more unified and flexible
exchange rate are also important and unification of the exchange rate should be
expedited.
“Once the COVID-19 crisis passes, the focus should remain on
medium-term macroeconomic stability, with revenue-based fiscal consolidation
essential to keep Nigeria’s debt sustainable and create fiscal space for
priority spending. Implementation of the reform priorities under the Economic
Recovery and Growth Plan, particularly on power and governance, remains crucial
to boost growth over the medium term.
“The emergency financing under the RFI will provide much
needed liquidity support to respond to the urgent BOP needs. Additional
assistance from development partners will be required to support the government’s
efforts and close the large financing gap. The implementation of proper
governance arrangements—including through the publication and independent audit
of crisis-mitigating spending and procurement processes—is crucial to ensure
emergency funds are used for their intended purposes.”
